Exxon Loses Over $1b From Russian Sanctions

Exxon has turned into a collateral victim of the US economic sanctions against Russia.  Exxon, the world’s biggest oil and gas company by value, entered Russia in the 1990s and has enjoyed a long and fruitful presence there.

This presence was set to expand further with Exxon’s plans to take part in the exploration and exploitation of the country’s Arctic shelf. But unfortunately for Exxon, the US and the EU hit Russia with sanctions over the annexation of Crimea, Oil Price reported.

The sanctions forced Exxon to shelve its Arctic plans, and it started to lose money from revenues generated by its ongoing Russian projects, such as the flagship project Sakhalin-1 and a number of joint ventures with Russia’s Rosneft.

It also lost future revenues. The Arctic venture alone was valued at $500 billion in total investments. What made the project particularly appealing for Exxon was that Rosneft’s CEO, Igor Sechin, had promised to exempt the company from export duties and property tax. It was all going so well before the White House ordered Exxon to basically drop everything and go home, banning the export of any technical know-how and equipment in the area of drilling for oil and gas, including shale technology.

As of early 2015, seven months after sanctions were introduced, Exxon had suffered losses amounting to about $1 billion from its Russian operations.